I am struggling to understand a key concept of the new Ethereum. I understand that some ETH rewards are burnt, but clearly the 5% rewards need to be created first and they are given to stakers as rewards. How would the issuance of new ETH only be around 1% by latest estimates https://www.coindesk.com/markets/2022/09/08/ethereum-merge-may-not-be-immediately-deflationary-crypto-trading-firm-qcp-says/
Since EIP-1995 (https://github.com/ethereum/EIPs/blob/master/EIPS/eip-1559.md) was added to the ethereum protocol, a significant portion of the fees paid by the users are now burnt instead of paid to the miners. You seem to be forgetting that part here. New ETH created on each block (currently 2/block) won't necessarly be more than the ETH burnt on each transaction by users.